Supreme Court raps telcos for not paying up; Sensex falls below 50-DMA

Falling below their 50-day moving average, the Indian equity benchmarks -Sensex and Nifty – closed in the red on February 14 as investor sentiment weakened further after the Supreme Court ordered telecom players to clear their dues to the government by March 17.

India’s top court on February 14 asked the top telecom firms to explain why contempt action should not be taken against them for non-compliance of its order to pay adjusted gross revenue (AGR) of Rs 1.47 lakh crore to the telecom department.

The apex court’s stance weighed on financial stocks also because of their exposure to the sector.

“The Supreme court ruling on telecom players instructing them to pay dues by March 17 will impact the asset quality of banks having decent exposure in the sector. Banks stocks will be under pressure given high inflation and RBI is unlikely to cut rates in the near-term,” said Vinod Nair, Head of Research at Geojit Financial Services.

There was no relief on the macroeconomic front also as the wholesale price inflation (WPI) for January stood at 3.1 percent. The wholesale inflation, measured in terms of a wholesale price index (WPI), grew 2.59 percent during December and rose to 2.76 percent in January 2019, according to government data.

The final tally on D-street on February 14- Sensex ended 202 points, or 0.49 percent, lower at 41,257.74, while Nifty finished with a loss of 61 points, or 0.50 percent, at 12,113.45. With this, both extended their losses into the second consecutive session.

In sync with the benchmarks, BSE Midcap and Smallcap indices also ended lower by 0.79 percent and 0.40 percent, respectively.

For the week, Sensex and Nifty gained 0.3 percent and 0.1 percent, respectively.

Top Nifty gainers: Yes Bank, Bharti Airtel, UPL, BPCL and HCL Technologies

Top Nifty losers: GAIL, Bharti Infratel, IndusInd Bank, Eicher Motors and Power Grid Corporation of India.

Stocks & Sectors:

Barring BSE Telecom, Teck and Energy, all sectoral indices lost today. The Telecom pack settled with a strong gain of 2.50 percent, supported by shares of Bharti Airtel. BSE Energy index rose 0.47 percent while BSE Teck settled with a gain of 0.22 percent.

With a loss of 2.58 percent, BSE Utilities emerged as the top loser among sectoral indices, followed by BSE Power that fell 2.31 percent and BSE Metal which settled 1.48 percent lower.

A volume spike of 2,700 percent was seen in Vodafone Idea. Besides, Volume spike of 300-800% was seen in stocks like IDFC First Bank, Mindtree, Shree Cement, Bharti Airtel and Bharti Infratel.

Long Buildup: Bharti Airtel, Glenmark Pharmaceuticals, Mindtree

Short Buildup: Vodafone Idea, Bharti Infratel, GAIL

Stocks in the News

Vodafone Idea: Vodafone Idea share price crashed 23 percent after the Supreme Court (SC) dismissed the review petitions filed by the telecom companies and demanded an explanation on why it should not be penalised for the contempt of court.

Yes Bank: Yes Bank share price continued its upward journey on the second day with a gain of 5 percent as the company received non-binding expressions of interest from several prominent investors.

Bharti Airtel: Shares of Bharti Airtel ended almost 5 percent higher with its market valuation surpassed Rs 3 lakh crore mark as most brokerages remained positive on the stock despite the AGR overhang.

Page Industries: Shares of Page Industries fell 5 percent, a day after the company reported its operating margin as the lowest in 30 quarters and adjusted for the Ind-AS 116 impact, the margin was among the lowest ever.

Technical View:

Nifty consolidated for the second day in a row to form a bearish candle. It slipped below its crucial 50-DMA placed at 12,126 on daily charts.

Nifty formed a Doji candle on a weekly scale while a Bearish candle on a daily scale which indicates a tug of war between Bull and Bears with some supply at higher zones.

As long as Nifty holds above 12000 levels, we may see ongoing optimism with a consolidative move towards 12,250 levels, suggest experts.

India VIX moved up by 1.83 percent at 13.61 levels.

Three levels: 12,092 | 12,247 | 12,272

Maximum call OI: 12,500 | 12,400

Maximum put OI: 12,000 | 11,800

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